California Appeal Bonds
What is a California Appeal Bond? Understanding Appeal Bonds
In California, an appeal or supersedeas bond is generally referred to as an undertaking. When appealing a court’s decision, an appellant can post an appeal bond to stay the enforcement of a judgment. Surety companies underwrite California appeal bonds, and the process is commonly executed through appointed surety agents working directly with the appellants and their attorneys.
The posting of an appeal bond demonstrates that the appellant is not merely appealing the underlying judgment to put collections efforts on hold, as it guarantees to the court and the appellee that the appellant will satisfy the judgment if it is affirmed by the appellate court.
California Appeal Bond Amount Requirements
According to California Code of Civil Procedure Section 917.1, the undertaking or appeal bond must be double the amount of the judgment unless it is submitted by an admitted surety insurer. In that instance, the bond amount requirement is one and one-half times the amount of judgment. California Code of Civil Procedure Section 995.120 defines an admitted surety insurer.
California Code of Civil Procedure - CCP 917.1
(a) Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:
(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action.
(2) Costs awarded pursuant to Section 998 which otherwise would not have been awarded as costs pursuant to Section 1033.5 .
(3) Costs awarded pursuant to Section 1141.21 which otherwise would not have been awarded as costs pursuant to Section 1033.5 .
(b) The undertaking shall be on condition that if the judgment or order or any part of it is affirmed or the appeal is withdrawn or dismissed, the party ordered to pay shall pay the amount of the judgment or order, or the part of it as to which the judgment or order is affirmed, as entered after the receipt of the remittitur, together with any interest which may have accrued pending the appeal and entry of the remittitur, and costs which may be awarded against the appellant on appeal. This section shall not apply in cases where the money to be paid is in the actual or constructive custody of the court; and such cases shall be governed, instead, by the provisions of Section 917.2 . The undertaking shall be for double the amount of the judgment or order unless given by an admitted surety insurer in which event it shall be for one and one-half times the amount of the judgment or order. The liability on the undertaking may be enforced if the party ordered to pay does not make the payment within 30 days after the filing of the remittitur from the reviewing court. […].
Who Needs Appeal Bonds in California State Cases?
In California courts, appeal bonds are typically required to stay the enforcement of a money judgment while an appellant seeks to overturn a judgment or order. Except for judgments against most public entities, most monetary judgments require an appeal bond to prevent execution of the judgment during the appeals process.
Here are a few common cases that require appeal bonds in California:
- Contract Disputes
- Class Action Lawsuits
- Personal Injury Lawsuits
- Property Disagreements
- Business Litigation
- Employment Law Disputes
- Product Liability Claims
- Intellectual Property Conflicts with Monetary Awards
- Toxic Tort Litigation
- Domestic Relations Cases involving property division, alimony, or child support
California Appeal Bonds Underwriting Requirements
While appeal bonds are technically insurance products issued by surety companies, they function more like a financial guarantee whereby the surety is guaranteeing to pay the judgment to the appellee up to the bond amount if the judgment is not satisfied by the appellant.
Unlike insurance, however, the appellant has to indemnify or repay the surety if the surety pays the judgment. Consequently, appeal bonds are generally considered an extension of credit and underwritten more like bank loans.
Considering that most appeals do not result in a reversal of the judgment or order, there is a strong likelihood that the surety providing the appeal bond will receive a claim. As a result of this high probability, surety companies generally require collateral for the full bond amount.
However, there are exceptions to the collateral requirement, such as if an appellant has a significant net worth and liquid assets relative to the bond amount. Publicly traded companies, banks, insurers, large private firms, and high-net-worth individuals may meet these requirements, and not need to post collateral. (Find out if your client may qualify for an appeal bond without collateral, here.)
Common forms of collateral include:
- Cash: This is the quickest and simplest way to secure an appeal bond.
- Bank Letters of Credit: These are a written guarantee from a bank to the surety that promises payment of the required amount upon demand by the surety.
- Real Estate: This could include both residential properties (single-family and multi-family) and commercial properties (office, industrial, or retail).
- Marketable Securities: Non-retirement brokerage accounts holding stocks and bonds that are pledged to a surety company.
FAQs
What are the Best Practices for Securing an Appeal Bond through an Admitted Surety Insurer?
Securing a California appeal bond can be complex. However, following best practices can help ensure a smooth experience. Here’s what we recommend:
- Contact a surety bond agent early. This advantage helps the client explore all options and ensure the appeal bond can be filed without delay.
- Ensure attorney involvement. Attorneys are critical in confirming the bond amount based on the jurisdiction’s requirements and parts of the judgment being bonded, updating the surety company on the deadline to file the bond, and reviewing the bond form to ensure it conforms with local rules.
- You can choose the right surety bond agent by interviewing multiple professionals and choosing one with a strong track record of experience and who specializes in California appeal bonds.
For more insights, check out our guide: “The Biggest Mistakes Made with Appeal Bonds.”
How Much are the Premium Rates for California Appeal Bonds?
The cost of a California appeal bond is determined by the premium rate, which typically ranges from 0.30% to 4% of the total bond amount. The exact premium rate will depend on several factors, such as:
- The size of the bond requirement
- The type of collateral provided if required
- The financial strength of the appellant relative to the bond amount, if the bond is being considered without collateral
For example, if the appeal bond is required for $8,000,000 and the premium rate is set at 0.75%, the bond premium would be $60,000. It’s important to know that surety companies charge premiums for appeal bonds annually until their liability under the bond has been released. The premium for the first year is considered fully earned once the bond is issued, and any renewal premiums for subsequent years are prorated if the bond is exonerated midterm.
How Long Does It Take to Get an Appeal Bond?
The time it takes to put a California appeal bond in place depends on various factors. For example, when collateral is not required, a bond can be approved and issued in as little as 24 hours in the most straightforward cases. However, the process can vary significantly when collateral is involved, and the time then depends on the type of collateral that is being used. For instance, cash collateral can be posted in just a few days, while securing real estate collateral can take 30 to 60 days, depending on the type and number of properties being posted.
Steps to Apply for an Appeal Bond
- Contact an appeal bond specialist to review your client’s bond requirements and start the process.
- CSBA will discuss the various options available with you and your client.
- Submit the following documents:
- Application
- Court complaint
- Judgment
- Notice of appeal
- CPA Audited Year-end Company Financial Statement if the client may be a candidate to qualify for an appeal bond without collateral.
- CSBA will work on obtaining competitive terms for your client with the admitted surety insurers we work with. CSBA will outline the appeal bond approval for your client and facilitate securing the collateral.
While the process can typically take a few weeks, CSBA’s expertise allows us to expedite the process and minimize any delays in finalizing the issuance of the appeal bond.
Why Choose CSBA for Your Clients' California Appeal Bond?
When your client needs to stay enforcement of a judgment, they need a professional surety agent who can guide them through this difficult process.
A Legacy of Expertise & Trust
Since 1984, CSBA has helped appellants from all different industries involved in almost every type of case imaginable secure appeal bonds to stay enforcement of California judgments. Whether your client is an individual appealing a $1 million judgment, or a publicly traded international company needing a $1 billion appeal bond, our team is able to leverage our 110 years of combined experience to assist in securing an appeal bond for your client with competitive terms.
Exclusive Surety Insurer Access & Creative Solutions
CSBA has exclusive and semi-exclusive access to top admitted surety insurers, allowing us to handle any size appeal bond with creative collateral solutions tailored to your client’s specific financial situation. Whether the bond amount is small or large, we ensure that appellants and their attorneys receive first-class service and the best possible terms for their appeal bonds.
Get Your Client’s
California Appeal Bond Quote Today
Deadlines for filing an appeal bond are normally very tight. Appellants and their attorneys will need a responsive and knowledgeable surety agent to navigate the process.
At CSBA, we make the appeal bond process smooth so you can focus on your case. Contact our appeal bond experts today to take the next step toward securing your client’s appeal bond.